A Hitchhiker's Guide to Privacy-Preserving Digital Payment Systems: A Survey on Anonymity, Confidentiality, and Auditability

TL;DR

The paper questions how to design privacy-preserving digital payment systems that are simultaneously anonymous, confidential, unlinkable, and auditable. It proposes a design-oriented taxonomy that connects privacy objectives to concrete cryptographic primitives (e.g., commitments, ZKPs, MPC) and system architectures, spanning centralized and decentralized models and CBDCs. By tracing the evolution over three generations, the work highlights the inevitable privacy–auditability trade-offs and the rising importance of selective disclosure and regulatory-aligned mechanisms. The study emphasizes open research directions, including formal privacy definitions, scalable ZKPs, and cross-layer privacy protections, to enable privacy with accountable oversight in real-world payment ecosystems.

Abstract

Crypto-assets and central bank digital currencies (CBDCs) are reshaping how value is exchanged in distributed computing environments. These systems combine cryptographic primitives, protocol design, and system architectures to provide transparency and efficiency while raising critical challenges around privacy and regulatory compliance. This survey offers a comprehensive overview of privacy-preserving digital payment systems, covering both decentralized ledgers and CBDCs. We present a taxonomy of privacy goals -- including anonymity, confidentiality, unlinkability, and auditability -- and map them to underlying cryptographic primitives, protocols, and system architectures. Our work adopts a design-oriented perspective, linking high-level privacy objectives to concrete implementations. We also trace the evolution of privacy-preserving digital payment systems through three generations, highlighting shifts from basic anonymity guarantees toward more nuanced privacy-accountability trade-offs. Finally, we identify open challenges, motivating further research into architectures and solutions that balance strong privacy with real-world auditability needs.

Figures (1)

• Figure 1: Dimension of analysis along which we review privacy-preserving digital payment systems.